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Mississippi Students Default More Than US Average on Student Loans

Dec. 15, 2016
Loans, Student Loans
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Students at Mississippi colleges and universities are significantly more likely than those in other states to default on their student loans, according to a study by the U.S. Department of Education.

The study found that 14.6% of students at Mississippi postsecondary schools who were scheduled to begin paying their loans in 2013 were in default by the third year of repayment. The default rate for Mississippi was the fourth-highest in the nation, after New Mexico, West Virginia and Kentucky.

The overall U.S. default rate was 11.3%. (See the default rates for all 50 states.)

The study looked at more than 6,000 postsecondary schools in the nation and 44 in Mississippi, including private, public and proprietary (for-profit) schools. Among the largest in the state by enrollment, default rates were:

  • Mississippi Gulf Coast Community College in Perkinston: 23.8%.
  • Hinds Community College in Raymond: 23.6%.
  • University of Southern Mississippi: 11.2%.
  • Mississippi State University: 8.2%.
  • University of Mississippi: 7.6%.

(Click here to search the federal database for default statistics by school, city or state.)

Nationwide, public community colleges had an average default rate for 2013 of 18.5%, and proprietary schools were at 15%. For four-year public colleges, the average rate was 7.3%, and for four-year private colleges it was 6.5%.

The default rates for community colleges, vocational schools and for-profit colleges tend to be higher because former students are less likely to have completed their studies or see a boost in earnings, and often can’t keep up with loan payments, according to a report in the Brookings Papers on Economic Activity.

>> MORE: Student loan default: What it means and how to deal with it

The new report provides a detailed look at default rates, but it may not show a complete picture of the debt burden on students. While the report takes a snapshot of borrowers who are within the first three-year window of their repayment phase, it doesn’t capture those who delay repayment until after the three-year measurement window expires.

Jackson advisor: Student debt can affect major life decisions for years after college

People with college degrees earn more, on average, than those with only a high school diploma. In 2014, the median income of young adults with a bachelor’s degree was $49,900, compared with $30,000 for people who completed high school, according to the National Center for Education Statistics.

However, excessive student loan debt is a major burden for many Americans. It can significantly hamper borrowers’ finances by increasing their overall debt burden and cutting into money they could use for mortgages, retirement and other long-term investments. Total student loan debt was $1.36 trillion as of June, according to the Federal Reserve Board, up from $961 billion in 2011.

We asked Jackson, Mississippi-based Chris Burford, a certified credit counselor with Clearpoint Credit Counseling Solutions, about how families can integrate student loans into their financial lives.

How can students and families make sure their loans are a good investment in their future?

Families need to gather information, both from the students — what their goals are — and from potential schools, to ensure that the school offers programs that align with the student’s goals and to determine costs.

Filling out the Free Application for Federal Student Aid will help determine the out-of-pocket cost of attendance and the necessary family contribution. The FAFSA is the primary form that the federal government, states and colleges use to award grants, scholarships, work study and student loans to help reduce the overall cost and student loan debt.

How does taking out student loans potentially affect students’ future financial lives?

Student loans will have an impact on your finances for at least 10 years, which is the standard repayment term for federal student loans. Having student loan debt can affect your decisions on marriage, starting a family, buying a house and making other major purchases that rely on credit and debt-to-income ratios.

What should parents and students keep in mind when taking out student loans?

Keep in mind the overall costs of attending college — not just tuition but also books and room and board. Also, review the potential job market for the discipline the student will major in to help determine if the expenditure is cost-effective for the jobs the student might be seeking after graduation.

What options exist to improve the terms of student loan debt?

The interest rates on federal student loans are set by Congress. Interest rates on private and parent loans are determined by the borrower’s credit history; having good credit scores will result in lower interest rates and lower payments on those loans.

After graduation, students can look for payment options such as loan consolidation or income-driven repayment plans to help improve terms.

What should families do if they find they can’t make payments?

Contact the loan servicer to see if your loans qualify for concessions such as deferment or forbearance. This may give you enough time to make it through the financial hardship and then continue with payments on schedule. If the hardship continues, other payment options may be available. The main thing is to stay in contact with the servicer and explore your options.

Are income-driven repayment plans a good option?

Income-driven repayment plans can be a good option. However, you’ll likely pay much more in interest charges over the repayment period with these plans compared with a standard repayment plan.

Chris Burford is a Jackson-based credit counselor with Clearpoint Credit Counseling Solutions.

State student loan default rates

The 50 states ranked from highest student loan default rate to lowest.
RankingState Percent defaulting on student loans
1.New Mexico18.9

West Virginia16.2
12.South Carolina13.2
16.South Dakota12.3
22.North Carolina11.6
41.New Jersey9
45.New York8
46.Rhode Island7.9
47.New Hampshire7.8
49.North Dakota6.5